A Dallas developer is plotting an affordable housing development on San Antonio’s Northeast Side, but tightening conditions are creating difficulties in getting projects across the finish line.
Palladium USA, in partnership with the San Antonio Housing Trust Public Facility Corporation, recently broke ground on Palladium Crestway, a $65 million apartment complex at the intersection of Loop 410 and Interstate 35.
The San Antonio Housing Trust PFC issued $31 million in tax-exempt bonds, which were purchased by Cedar Rapids Bank and Trust. PNC Bank provided $27 million in equity for the 4% low-income housing tax credit project.
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Thirty units are reserved for residents making 30% of the Area Median Income, 187 units at 60% AMI, 18 units at 70% and 36 units at 80%. The development includes one-, two- and three-bedroom floor plans and a swimming pool, fitness center, conference center, dog park, computer lounge and children’s playroom.
“We were working with another developer who identified the site, but decided to move on to another project,” said Pete Alanis, executive director of the San Antonio Housing Trust Foundation. “We were very bullish on the site because of location to Randolph Park and Ride.”
He said proximity to transportation is an important factor for affordable housing developments.
“Palladium saw the site, liked it,” he said. “They did a lot of hard work to make sure the development was fantastic for families in the area.”
The relationship between interest rates and affordable housing developments is inverse. As rates have come up, Alanis said it’s gotten more difficult to make projects work.
“The last year has been really challenging for developers to make affordable housing pencil,” he said. “All projects have gaps due to elevated interest rates.”
Even on Crestway, he said Palladium had to obtain debt capital from another source to get the project across the finish line.
“Good on them for taking the risk themselves to get the deal closed,” Alanis said. He said the Housing Trust would be looking at other sources of public funding to offset Palladium’s costs.
According to Alanis, a combination of land availability, prices and getting low-income housing tax credit boosts by being in qualifying census tracts and difficult development areas have been pushing projects to areas like San Antonio’s South Side.
“The (San Antonio Housing Trust) board approved nine projects last week. The northernmost parcel is at Borgfield Drive and Highway 281. The other projects are all along Loop 410 South,” Alanis said.
Pre-leasing for Palladium Crestway will begin next summer.